MORTGAGE rates in May presented a “reasonably calm picture” despite the political and economic climate.

UK Finance (formerly CML) figures released this morning show that homebuyer borrowing climbed by 10 per cent on April and 16 per cent on May last year, while buy-to-let lending rose by 16 per cent from the month before and 12 per cent year-on-year.

Brian Murphy, Head of Lending for Mortgage Advice Bureau, said the latest data from UK Finance this morning provides us with what would appear to be a reasonably calm picture with regards to mortgage lending in May.

He explained: “Home movers and First Time Buyers were still purchasing at volumes we’ve come to expect as normal over the last few months, remortgaging figures appeared to be steady and there was even a slight increase in Buy-To-Let borrowing, albeit driven by landlords remortgaging rather than purchasing.

“Of course, any year on year comparison are inevitably skewed due to the ‘bubble’ caused in the first quarter of 2016 from the changes in SDLT rates being introduced, but when reviewed in the context of 2017 alone, the figures would suggest that, as far as the UK public are concerned, the attitude in May was very much ‘business as usual’ with those who needed to transact doing so.”

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Mortgage rates: Homebuyer borrowing climbed by 16 per cent on May last year according to the data

Home movers and First Time Buyers were still purchasing at volumes we’ve come to expect as normal over the last few months, remortgaging figures appeared to be steady and there was even a slight increase in Buy-To-Let borrowing, albeit driven by landlor

Despite the political and economic climate in May, the data also demonstrates the UK housing market’s resiliency.

Brian added: “Of course, the underlying factors of lack of stock and ongoing buyer demand outstripping supply in many areas does assist in terms of underpinning current values, but it’s against that very backdrop that, with volumes of purchases maintaining current momentum, we can see the market ticking along pretty positively.

“Over in remortgage territory, the fact that there was a small increase in volumes in May isn’t entirely surprising either, but this was possibly more likely to have been driven by some of the highly competitive rates that were released, rather than consumer sentiment around the uncertainty of an interest rate rise.

“With all the factors at play then, it’s possible to suggest that what we’ve seen from the UK Finance data this morning is a reflection of the market in May which was holding steady and on ‘tick over’, rather than the ‘ticking time bomb’ that some more hawkish commentators were suggesting might be the case.”

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The PRA warned lenders about the risk of increasing mortgage repayment terms, which could lead to more people having to pay back loans from post-retirement income.

PRA chief executive Sam Woods made the comments in a speech which was supposed to be delivered in May but was delayed because of the general election.

He said the Bank of England had noticed a trend towards mortgage terms rising from 25 years to “35 years or even longer” in the market.

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Mortgage rates: Buy-to-let lending rose by 16 per cent from the month before

He said: “Of course, increasing the term reduces the level of each monthly instalment and makes the loan more affordable in the short term; however, it also increases the total amount of interest paid over the life of the loan quite significantly, and it increases the possibility that the final instalments may have to be met from post-retirement income.”

He stressed lenders need to consider whether an individual has the ability to meet repayments from retirement income, or sell their house and downsize to pay off the loan.

He continued: “If lenders become too narrowly pre-occupied with the profile of the loan in the first five years (in line with mortgage market review affordability rules), this could store up a problem for the future.”

Woods also said the PRA will look to crack down on lending practices which attempt to hide risks from balance sheets.